While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Key environmental and social (E&S) risks and issues related to this project include: adequate assessment of the E&S impacts of the Project and implementation of associated mitigation measures; implementation of effective EHS management systems; engagement with local communities in accordance with local requirements and IFC Performance Standards; assurance of fair, safe and healthy working conditions; resource efficiency; management of emissions, wastes and discharges; and life and fire safety management of all the public access buildings (retail stores and dealer outlets).

The retail stores and dealer outlets will be located in authorized commercial areas. The TV assembly factory and refrigerator and air conditioner assembly factory are located in designated and well established industrial areas of Gazipur and Bhaluka near Dhaka. The land for assembly units was purchased by BML from the Bhaluka industrial authority in 2010. The Project thus does not involve any new land acquisition and there are no forest lands, ecologically sensitive areas, indigenous people or cultural heritage in the vicinity of any of the Project sites. Accordingly, the findings of the Project review indicate that there are no impacts related to Land Acquisition and Involuntary Settlement (PS5), Biodiversity Conservation and Sustainable Management of Living Natural Resources (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

IFC’s assessment considered the Company’s EHS performance in the establishment and operation of its facilities, compliance with national and local permit requirements and the Company’s engagement with local communities as well as its suppliers, regarding EHS performance and corporate social responsibility.



- Environmental & Social Assessment:



Retail Operations: The retail stores and dealer outlets are located in authorized commercial areas. No formal environmental and social impact assessment (ESIA) is required for this purpose. However, as a part of permitting process, BML is required to assess and revise its designs/plans as required, so as to comply with a range of requirements related to structural safety, fire safety, water and electricity supply amongst others thereby mitigating key environmental and safety related impacts.



Assembly Operations: The land for the assembly sites was acquired through direct purchase from the industrial authority in June 2010. There was no economic or physical displacement of people as a result of this acquisition.



BML has received ‘fire service and civil defense clearance certificate’ and ‘location clearance certificate’ from the Government for operating the sites.



The ESIA for the TV assembly and refrigerator and air conditioner assembly factory is in progress as per the environment permit requirements of the Environment Department, Government of Bangladesh. BML will implement the environment management program (EMP) to be compiled as part of the ESIA as per the project ESAP.



Management Systems:



BML has not yet implemented a formal and documented management system certifiable to international standards such as ISO 9001 or ISO14001. However, corporate-wide procedures and practices are in place for the day-to-day operations as well as for new project development. BML will design and implement a certifiable Quality Management System (QMS) as per ISO 9001 for its manufacturing and retail operations and achieve 3rd party certification by July 2013. Where possible, BML will integrate element of its Environmental, Health and Safety Management System (EHSMS) and procedures as a part of its QMS.



BML has articulated an Occupational Health and Safety policy covering all its operations. The policy articulates BML’s commitment to safety management and compliance with national safety laws and regulations. BML has also developed and implemented a ‘Waste Management Policy’ and ‘Personal Protective Equipment (PPE) usage Policy’ across its operations.



BML will establish an overarching policy defining the E&S objectives and principles for all operations that will guide them to achieving sound E&S performance. The policy will specify that the BML operations will comply with the applicable laws and regulations and the IFC Performance Standards. The policy will indicate who within the organization will ensure conformance with the policy and be responsible for its execution. BML will communica
te the policy to all levels of its organization and other stakeholders.





- Organization:

BML operations comprises of different activities such as import, assembly, distribution, marketing, sales, service and logistics. E&S issues for each activity are managed independently in a decentralized manner.



Retail Operations: BML has a well defined organization structure with clearly defined roles and responsibilities for retail operations (including sales, marketing, service and logistics) headed by the Managing Director at the corporate level. Human Resources (HR), finance and accounts are also managed at the corporate level.

The manager of each retail store or a warehouse is responsible for all the day-to-day operational issues at their end including managing the local E&S and HR related issues.



Assembly Operation: The Factory Manager reports to the Managing Director at the corporate level and is responsible for managing E&S and HR related issues at the factory site along with the local operational team.



As per the proposed E&S policy (as above), in order to manage the E&S aspects of the operations across the retail operations and assembly units, BML will designate a senior officer as the relevant management representative at the corporate level; they will oversee and coordinate the E&S and corporate social responsibility (CSR) functions with the help of respective operational teams.



Emergency Preparedness and Response:



BML will develop and implement on-site emergency preparedness and response (EPR) procedures for the manufacturing / assembly units. The procedure will cover accidents and emergency situations such as fire, earthquake, natural disasters, etc. BML has presently provided fire extinguishers for handling fire related emergency in its TV plant at Gazipur. Training of employees on use of fire extinguishers is also provided on a regular basis.



BML’s retail stores/warehouses are equipped with fire fighting systems such as a fire alarm and fire extinguishers depending on the fire risk profile and the specific local situation. BML has commissioned a third party contractor for refilling and maintenance of fire extinguishers for all its retail stores and warehouses on a regular basis.



Monitoring & Reporting:



BML’s corporate office compiles the information related to HR, operational aspects and commercial aspects such as stocks and sales (in case of retail operations). The Company has recently commissioned an ERP system across different operations for effective monitoring and control. The ERP system connects different retail stores and warehouses with the corporate office and information such as stock inventory, staff attendance, payments and receivables is monitored.



In order to extend this monitoring program to cover E&S aspects, and benchmark the performance of various retail outlets, internally as well as against the international best practices, BML will develop a Standard Operating Procedure (SOP) f
or monitoring and reporting of key performance indicators (KPI) across all the retail stores. KPI’s will include energy and water consumption values, waste and emission record, safety related data such as accidents, fire and safety drills, etc. The summary reports coming out of this exercise shall be submitted to top management on regular basis.



As with the existing assembly sites, The new facilities will be managed by a designated factory Manager who will work in co-ordination with LG and Hisense personnel to ensure effective management of quality and E&S issues allied to monitoring and reporting on key E&S aspects at the assembly units.



- Managing Supply Chain:



BML’s supply chain for the retail business comprises of consumer goods manufactured by prominent international brands such as LG, Hisense and Kelon. LG has initiated its own ‘environmental product policy’ that promotes initiatives to “reduce green house gas emissions” and develop eco-products development for enhanced resource efficiency and reduced environmental impacts throughout the life cycle of the product. BML also participates in various LG related sustainability activities such as sustainability conferences and environmental seminars.

Retail Operations:



The retail business currently has around 1200 people comprising of both direct and indirect employees, which will be scaled up to around 1500 by 2013 once the new retail outlets are operational.



Assembly Operations:



The TV assembly site has 50 regular employees and BML will employ nearly 500 individuals comprising of both direct and indirect employees at the assembly units for TV, refrigerators and air conditioners by 2014.



- Human Resource (HR) Policy, Management



BML’s corporate HR department oversees the HR management across all its businesses and facilities, with dedicated HR professionals. Corporate HR policies have been developed as a part of an Employee Handbook covering various issues related to terms of employment and working conditions for the employees. These are related to recruitment, probation, confirmation, performance evaluation, remuneration and promotion, leave, overtime, maternity benefits, retirement and disciplinary procedures. The Employee Handbook covers regular as well as contract employees at different retail operations and assembly sites.



For the assembly and retail operations the Head of HR is responsible for the appointment of non-management staff duly recommended by the respective Line Managers. The Head of HR has the authority and responsibility to make decisions with respect to hiring, placement, salaries, evaluation, training, transfer, promotion, discipline and separation of the staff according to the Human Resources policy of BML.

For retail operations the store/warehouse manager is responsible for managing the staff and for ensuring compliance with applicable labor laws for these employees.



At the assembly operations the Factory Manager is responsible for managing staff and ensuring compliance with applicable labor laws for these employees.



- Child and Forced Labor



Child or forced labor is not employed in any manner in BML’s operations. Minimum employment age for all employees is 18 years which is verified through college / school certificates before recruitment.



Further, to ensure that no child labor is employed by any of its contractors (especially construction / transportation) relevant clauses will be issued in the contracts with these contractors. BML will regularly monitor and take strict action (penalty / termination) in case of any observed violations.



- Freedom of Association, Grievance Mechanism



There is provision for collective bargaining in Bangladesh and BML has no restrictions on employees joining unions, although none that are active at any of BML’s businesses.



Currently, employees can raise grievances through a written complaint to their direct supervisors / line managers as detailed out in a documented procedure in the Employee Handbook; grievances may then be further escalated to the Head of HR /Managing Director depending on the nature of the complaint. Going forward, the Company will update its HR manual / Employee Handbook, to in
clude in its grievance handling procedure, mechanism to also allow for anonymous complaints to be raised and addressed. BML will ensure that contracted workers such as sales and warehouse staff also will have access to this grievance mechanism.



- Training and Human Resources Development:



Each business operation defines training needs for its staff, which are then forwarded to the corporate HR team. Accordingly, training programs are developed and delivered by the corporate HR team throughout the year.



All new employees undergo extensive induction training, which is organized every month. Induction programs for the retail business also include on product-related trainings for the sales and service staff.



At the assembly units extensive training will be provided to all the employees, to be recruited in the future. Local technical teams will be provided training on equipment operation and maintenance by the Hisense and LG technical teams. Training on life and fire safety aspects will also be provided.



- Occupational Health and Safety:



The retail store and warehouse environments do not present significant occupational health and safety (OHS) risks for the employees. Loading/unloading of some heavy material may result in limited ergonomic impacts on the workers. Adequate personal protective equipment (PPE) such as shoes, gloves and masks are provided to the workers as needed.



For the assembly units, the Company will develop and implement a Safety Manual to ensure effective management of OHS risks for the employees. The Safety Manual will be developed by an external consultant based on findings of a hazard identification and risk assessment (HIRA) to be undertaken for both the assembly units. Presently, BML has provided PPE’s such as hard hats, shoes, ear muffs, goggles, etc. to its employees and contract workers working at its assembly units.



- Construction Safety:



Retail Operations: The new retail stores will not require any construction as they will be leased / rented in existing commercial buildings.



Assembly Operations: The construction of TV assembly factory is completed and it is presently under operation. The total area of this factory is 5400 m2.



For the refrigerator and air conditioner assembly factory, construction work still needs to be completed for which several contractors will be deployed. The refrigerator and air conditioner assembly factory has a total area of 180,000 square meters. The factory will have three different sheds for assembly of Hisense refrigerators, LG refrigerators and LG air conditioners.



An old existing factory shed of area 5400 m2 (two floors) will be used for the assembly of LG air conditioners following renovation and modification.



A new factory shed of area 11,000 m2 is under construction for Hisense refrigerator assembly. The factory shed is well laid out with concrete floors, adequate cover along natural ventilation facilities provided via roof extractors.



A
new factory shed for LG refrigerators will be constructed on the same site. The plans and layout for LG refrigerator assembly line are under preparation and yet to be finalized.



Utilities such as storm water drains, internal roads, septic tanks, etc. are under construction and will serve all the three factory sheds.



Engineering teams from Hisense and LG will be responsible for erection and commissioning of the assembly lines and other equipments. A separate guest house / staff quarter building on the same site has been constructed and is used by engineering and technical staff staying on site. There are 12 rooms with adequate toilets and kitchen facility to cater to the requirement.



Most of the construction labor will be from the nearby areas and no separate labor camp will be required.



BML will introduce specific clauses in its contracts with the contractors to include appointing a safety officer on site reporting to BML; develop a safety calendar and accident/incident record for the site and procure insurance for all the workers.



BML’s management of human resources, policy and procedures on labor and working conditions comply with local national requirements and are consistent with IFC PS2 requirements.

IFC’s assessment considered the Company’s operations with regard to resources consumption (water and energy), efforts to optimize resource inputs, waste minimization and management practices in the construction and operations of facilities.



- Resource Efficiency:



Electricity is the key resource for BML’s operations, which also has a direct impact on its operating costs, and also the primary cause of Greenhouse gas (GHG) emissions. BML uses energy efficient bulbs and the LED lighting in both corporate office and retail stores alike to reduce the energy consumption; similar lighting is also used in the TV assembly plant.



Retail Operations: BML will review its store designs comparing with global best practices and develop standard guidelines for future stores. These guidelines, for instance, could include energy efficient measures such as “solar passive architectural design” of stores, high standards of thermal insulation, switchover to energy efficient lighting systems and water efficient plumbing and sanitary fixtures.



Assembly Operations: For new factory shed construction, BML has included provision for maximizing natural daylight via the roof as an energy conservation measure. BML will regularly monitor and measure specific energy consumption for its assembly operations and take actions as required to align with the national and international benchmarks.



- Water and Energy Supply:



Electricity is the primary source of energy for all the stores and is sourced from the national grid. Some stores have small capacity diesel-fired backup generators.



Refrigerator and air conditioner assembly factory site will have a power requirement of 4.5 MW which will be met through grid supply. BML will additionally install 3 x 1.6 MW diesel generators as a backup.



The TV assembly factory site has an installed diesel generator of capacity 1.5 MW as a backup to meet operational requirements.



Water is sourced from Water Supply and Sewerage Authority (WASA) Bangladesh for all the stores as well as the assembly facilities. Bottled water is sourced for drinking purposes.



It is estimated that the total water requirement of the assembly units will be around 1000 m3/day and is mainly associated with sanitary use.



Green House Gas (GHG) emissions attributable to BML’s annual consumption of electricity for the assembly plants is estimated to be about 24,000 metric tons of carbon dioxide equivalents per year.



Consistent with IFC PS3 requirements on GHG emissions, the Company will monitor and quantify GHG emissions annually in accordance with internationally recognized methodologies and report in the Annual Monitoring Report.



- Emissions and Waste Management:



Wastewater from the stores is discharged into the municipal sewerage system, which is further treated by the government treatment plant.



For the assembly plants, waste water from the canteen is discharged to the septic tanks; this will also apply to the new plant.




BML has developed and implemented a solid waste management policy for all its operations. BML will be importing CFC free compressors for refrigerators and air conditioners.



Solid waste from the operations (primarily domestic waste and waste packaging materials) shall be collected by the municipal authority for further treatment and disposal as per the environmental permit condition.



Hazardous waste from the manufacturing facility such as waste oil, waste batteries, foam waste, chemical containers and the like will be collected by a government authorized agency and disposed off in the government designated site.



Emissions will be primarily from backup diesel generators. These will be monitored and managed in accordance with environmental permit conditions.

IFC’s assessment considered the Company’s operations with regard to the impacts of the construction and operations of facilities including movement of vehicles to and from construction sites, containment of dust, noise and other nuisance factors and life and fire safety.



- Impacts on Communities:



Retail stores are and will be located in established commercial area and not entail new construction, and hence there will be no significant impacts on the nearby communities.



The assembly plants are directly accessible via the national highway and not located in proximity to any communities. As such, traffic related impacts due to the Project are expected to be minimal. Other impacts due to construction such as noise, dust will be temporary in nature and will be limited to the project site.



- Life and Fire Safety of Retail Stores:



BML complies with all local fire safety related regulatory requirements across all its stores such as provision of adequate fire extinguishers, training of employees on fire safety and display of signage for emergency exits. In addition, BML complies with the design and safety specification of the manufacturer such as LG and Hisense for their stores/warehouses. Accordingly, BML’s operational stores/warehouses are equipped with fire fighting systems such as a fire alarm and fire extinguishers depending on the fire risk profile and the specific local situation. BML has commissioned a third party contractor for refilling and maintenance of fire extinguishers for all its retail stores and operations on a regular basis.



In order to ensure minimum common fire safety design standards across all its stores and warehouses consistent with the international standards, BML will commission a fire safety professional to undertake a review of fire safety systems for a sample of its existing stores and warehouses. Based on this review, the professional will develop screening criteria and standard design specifications for life and fire safety systems for future additions. These will be then implemented for all the future stores being developed under the Project. BML will undertake a similar review of existing assembly plant and design for future operations.



For the assembly operations, BML will implement a fire safety system in line with local and national regulatory requirements.



On the basis of the above information, and by implementing the ESAP it is concluded that the Project has been designed and will be operated in compliance with IFC’s Performance Standards and the applicable WBG EHS Guidelines.

Concern for the community and the environment and taking the responsibility to protect them is one of the core values articulated by BML management. Accordingly, BML implements several corporate responsibility programs such as financial support to schools and blood donation camps amongst others.

The company is in the process of formalizing its engagement with the communities in a more strategic manner. For the assembly plants, the Company will develop and implement a stakeholder engagement plan comprising a grievance mechanism and plan for external communication on the environmental and social impacts of the operations. Local disclosure of this Environmental and Social Review Summary (ESRS) document will form an important aspect of Company’s community engagement and disclosure program.

The Company will disclose this ESRS and the ESAP at its website: http://www.butterfly-lg.net as well as locally at the following address:

Butterfly Marketing Limited
71 Motijheel C/A
Dhaka-1000
Bangladesh.

All inquiries and comments may be directed to:

Mr. Mahbubul Haque Sufyani
Designation: Executive Director
Address: 71 Motijheel C/A, Dhaka-1000
Tel: 7169150-3
Fax: 9561317-8
Email: mailto:m.sufyani@butterfly-lg.com

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
BML, for its retail and assembly operations, will establish an overarching policy defining environmental and social (E&S) objectives and principles including the requirements for compliance with applicable laws and regulations and IFC Performance Standards; and roles and responsibility for implementation thereof will also be defined.	12/31/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
BML will designate a senior officer at corporate level to oversee and coordinate the E&S and corporate social responsibility functions with the respective operational teams.	12/31/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
BML will implement the environment management program (EMP) as per the requirements of Environment Department, Government of Bangladesh following completion of the Environmental and Social Impact Assessment for the TV assembly factory and refrigerator and air conditioner assembly factory.	12/31/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
BML will review the store designs associated with retail operations and compare these to global best practice relative to energy efficiency and develop standard energy efficiency guidelines for future stores (On rented premises, to the extent such solutions may be practical or feasible). These guidelines, for instance, could include energy efficient measures such as “solar passive architectural design” of stores, high standards of thermal insulation, switchover to energy efficient lighting systems and water efficient plumbing and sanitary fixtures. For assembly operations, BML will regularly monitor and measure specific energy consumption and take actions as required to align with the national and international benchmark for such operations.	06/30/2013 12:00:00 AM	In Progress	Under discussion with IFC client
BML will develop a Standard Operating Procedure (SOP) for monitoring and reporting of key environmental and social performance indicators (KPI) for the retail and manufacturing business (such as energy and water consumption, waste and emission record, safety related data such as accidents, fire and safety drills, etc.)	03/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
BML will update its Employee Handbook / HR Manual to include: - A grievance handling procedure to allow for anonymous complaints to be raised and addressed. BML will ensure that contracted workers – such as sales and warehouse staff – will have access to this grievance mechanism.	03/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
BML will commission qualified professionals to undertake a review of life and fire safety systems for a sample of existing retail outlets and warehouses. Based on this review, BML will develop screening criteria and standard specifications to enhance life and fire safety systems for existing and future stores. BML will undertake a similar review of existing assembly plant and design for future operations.	12/31/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
BML will develop and implement an on-site emergency preparedness and response procedure for the assembly plants. BML to implement fire safety systems in line with local and national regulatory requirements.	12/31/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
BML will develop and implement a Stakeholder Engagement Plan, comprising a grievance mechanism and plan for external communication on environmental and social performance of the assembly plants to the nearby communities and other stakeholders.	03/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
BML will introduce specific clauses in its contracts with the contractors to include: appointing a safety officer on site reporting to BML; development and implementation of a safety calendar and accident/incident record for the site; procurement of insurance for all the workers; requirements to ensure no child labor is employed by any of contractors (especially construction / transportation). BML will regularly monitor and take strict action (penalty / termination) in case of any observed violations.	11/30/2012 12:00:00 AM	Completed	Completed	02/11/2013 12:00:00 AM
For the assembly plants, BML will develop and implement a Safety Manual to ensure effective management of occupational health and safety risks for employees. The Safety Manual will be developed by an external consultant based on findings of a hazard identification and risk assessment (HIRA) for both the assembly units.	03/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
For the assembly plants, BML will monitor and quantify Green House Gas emissions annually in accordance with internationally recognized methodologies and report in the Annual Monitoring Report.	06/30/2013 12:00:00 AM	In Progress	Under discussion with IFC client